Nigeria’s Money Supply Rises by 65% Year-on-Year to N107.1 Trillion in August 2024

Nigeria’s broad money supply (M2) surged by 65 percent on a year-on-year basis, reaching N107.1 trillion in August 2024, according to newly released data from the Central Bank of Nigeria (CBN). This significant increase in the money supply highlights the growing liquidity within the economy over the past year.

The report also showed that M2, which includes currency in circulation and demand deposits, experienced a modest month-on-month increase of 0.75 percent from N106.3 trillion recorded in July 2024. This steady growth reflects the continued expansion of Nigeria’s monetary base.

Compared to the corresponding period in 2023, when M2 stood at N64.8 trillion, the current figure represents a substantial jump of 65 percent. This sharp rise signals increased liquidity driven by various factors, including changes in government fiscal policies, monetary interventions, and possibly inflationary pressures affecting the economy.

The rapid growth in money supply could have a range of implications for Nigeria’s economic landscape. While increased liquidity may provide more access to credit and stimulate economic activity, it also raises concerns about inflationary pressures, as more money in circulation can drive up demand for goods and services, potentially leading to higher prices.

Economists will be closely monitoring the effects of this increase in M2 on key indicators such as inflation, interest rates, and the exchange rate. The CBN’s monetary policy decisions in the coming months are expected to focus on managing this liquidity to ensure that it contributes positively to the nation’s economic stability while mitigating any negative impacts on price stability.

As Nigeria continues to navigate complex economic challenges, including foreign exchange volatility and inflationary pressures, the growth in money supply will likely play a critical role in shaping the country’s financial landscape. The CBN’s policy approach in response to this trend will be vital in determining how the economy adapts to these evolving dynamics.

The significant rise in Nigeria’s money supply underscores the importance of careful monetary management as the nation seeks to balance growth, inflation control, and overall economic stability.